R E S S R E L E A S E INTERNET BANKING

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1 P INTRNT BANKING R R L Online Banking delivers cross sell success as multiple accounts reach 4 per online banker compared to 2.4 for offline. 25% pa online account growth drives Internet Banking further. FINAL RLA Media embargoed for 12:05am Thursday 13 October 2005 A Please adhere to the following reference conventions for any MIC material used in your article(s): 1. Please refer to MIC in the following manner; MIC Australia (Market Intelligence trategy Centre) 2. Do not cite any individual MIC staff 3. Please forward an original version of the published article(s) to MIC for internal records 4. Further information about MIC services please contact the Marketing Department

2 PR RLA: INTRNT BANKING Online Banking delivers cross sell success as multiple accounts reach 4 per online banker compared to 2.4 for offline. 25% pa online account growth drives Internet Banking further. These results emanate from the just released June 2005 Bank-sponsored, MIC (Market Intelligence trategy Centre) Internet Banking Data Pooling Facility. The data collected and pooled is submitted by most of Australia s leading Internet Banks including pool members like National Australia Bank, uncorp, Westpac, BankWest and Bendigo Bank with special assistance from Citibank and Bank Of Queensland. A 36% growth in 18 months i.e. 25% pa in new Internet Banking account relationships translates into better cross sell performance online than offline. By the June quarter 2005, Internet bankers held on average 4 online account relationships with their bank compared to 2.4 for offline channel bankers. Furthermore, new account openings outstripped closures or rationalisation (as some customers prefer) 2.24 times and in net terms, account openings exceed account closures by 1.2 million in the last June quarter. This means that online multiple account relationships average some 4 per active user compared to a lesser multiple for offline customers of 2.4. These results stem from the recently released June quarter results of the co-operative bank Internet Banking Industry Pool assembled each quarter by MIC (Market Intelligence trategy Centre) on behalf of its bank pool members. It seems, says MIC (Market Intelligence trategy Centre) that the online channel has been singularly more successful than those offline channels in attracting and cementing multiple banking relationships and hence cross sell. This is the strategy that all banks are dedicated to delivering, in what is projected to be more difficult banking conditions in the future. The MIC pool collection for the June quarter 2005 shows that operating these accounts is a vital activity for an Australian online banking community which last quarter alone made 225 million transactions across these accounts. The result, says MIC (Market Intelligence trategy Centre) on behalf of its bank pool members, reflects in part, the uptake of new account developments like HIOA (High Interest Online avings Accounts) as well as cross sell success. This follows the efforts of some banks that have been encouraging customers to embrace more online services. In addition multiple account growth has also resulted from increased competition in some market segments e.g. credit cards, along with functionality changes, which favour or encourage the greater migration of offline accounts to online. 38 % online account growth (ie 25% pa) see Ave reach 4 Account relationships per customer Offline = 2.4 Online = 4.0 December 2003 June s 000s Transactions (inc. History) 150, ,403 New Account Openings Account Closures Account Opening Ratio ource: Market Intelligence trategy Centre (MIC) Internet Banking Data Pooling Facility June Quarter 2005

3 PR RLA: INTRNT BANKING ince 2003 the number of active user accounts in operation has grown by some 38% and the ratio of transactions while transactions on these accounts have grown by 48%. MIC says that several factors have created circumstances in which both the number of bank offerings has increased and the greater use of them online has also grown. While initial HIOA offerings were stand-alone products, the trend to link them with transaction accounts has encouraged offline to online migration. uch extensions were reflected in the Westpac first HIOA offering or the uncorp veryday Options and Business Investment Account Options for example. Accessibility has been enhanced as a consequence, not only with HIOA s but other account offerings. HIOA development has also enhanced the necessity for frequent transfers by way of online deposits to leverage best from the higher and regularly adjusted interest rates. MIC (Market Intelligence trategy Centre) believes that the high levels of HIOA interest rate offerings that were in excess of term deposit rates at the time also have supported the changes. The Reserve Bank s call to increase credit card competition has also been well heeded by Banks in this online channel via the promotion of interest free periods, and free fee and zero fee transfer innovations. everal banks had embarked on promotion of credit cards while some like Westpac have used them in specific cross sell promotion. The all you can eat flat fee account innovations in an increasing rate and fee sensitive environment, have also hit a nerve, with many Internet bankers seeking to limit fees by migrating accounts. xamples of these innovations include the second generation Westpac one $5 fee flat fee or the mart Account offerings by the National Australia Bank. In additional special targeted products, especially to the business sector, have prompted further migration. These include the authorise all functionalities of banks like Bendigo Bank, the future date or the multi fund transfer template of the National Australia Bank. Ironically the branch developments activity of some banks especially those with a rural focus, has encouraged wider small business acceptance, which has flowed though to online account migration. Additionally several Banks like uncorp have deliberately embarked on far more direct customer initiatives to encourage wider cross sell as a core strategy. Online product innovations that expand multiple accounts take up and use MIC Australia (Market Intelligence trategy Centre), on behalf of its bank pool members, announced these results for the June 05 quarter Internet Banking collection today. As the selected highlights in the table show the last 12 months in which this multiple account level has accelerated, saw more than five introductions of HIOA offering or significant upgrade or extensions e.g. separate business HIOA developments. Among the more recent HIOA developments were those of Commonwealth Bank, National Australia Bank and sanda. The same table also illustrates the various credit card initiatives from the more aggressive BankWest innovations to the reactivation online of credit cards with t George Bank. elected Functionality Advances and Internet Banking Account Developments Impacts and Drivers of 23 million Active Account Record Quarter of Internet Banking Website Feature arly Bank Innovator Introduction March qrt 2004 New payment scheduling - immediate credit card clearance National Australia Bank March qrt 2004 ingle access multi linked customer and accounts - business Bendigo Bank March qrt 2004 "Authorise all functionality for multiple signatory accounts Bendigo Bank March qtr 2004 veryday Options ub Accounts for HIOA and uncorp transaction banking March qtr 2004 HIOA interest rates exceed term deposit rates everal Banks e.g. uncorp and BankWest

4 PR RLA: INTRNT BANKING June qrt 2004 Credit card balance transfer option t George Bank June 2004 View savings and transaction account statements online Westpac October 2004 pecial business HIOA account introduction BankWest October 2004 TeleNet aver BankWest December qrt 2004 Multi fund transfer template National Australia Bank December qrt 2004 Automated reactivation of credit card renewals t George Bank December qrt 2004 Flat fee all you can eat mart Account introduction National Australia Bank December 2004 Maxi Direct high interest online savings account linked to transaction account Westpac February 2005 NetBank aver introduction Commonwealth Bank February 2005 Online aver ANZ March 2005 March 2005 Business Investment Account Options (HIOA and transaction banking) High Interest online savings account with transaction account links uncorp sanda March 2005 Real time online credit card approval t George Bank October 2005 High Interest online savings account with transaction account links National Australia Bank April 2005 International Money Transfer for overseas transfers Commonwealth Bank December 2004 $5 Flat fee multiple account options (all you can eat) Westpac May 2005 Zero fee credit card introduction including zero interest for four months zero annual fee BankWest ource: Market Intelligence trategy Centre (MIC) Internet Banking Data Pooling Facility June Quarter 2005

5 PR RLA: INTRNT BANKING Further Background Notes to MIC Facility ervice Development & Methodology These are findings from the MIC Internet Banking Data Pooling Facility collection for the June 2005 quarter. This latest report is the twentieth so far produced by MIC on this dynamic sector of the lectronic Banking market and is based upon banks supplying quarterly detailed Internet banking transaction data adhering to a standard format and consistent definitions designed by MIC. The report is compiled exclusively for the use of the members of the facility, a unique collaborative service, developed by MIC together with Australia s leading Internet banking financial institutions. Development of the facility by MIC is in response to the market s need to address the issue of widely conflicting market measures and the search for a definitive and regular measurement of Internet banking uptake. To date there has been much discussion regarding terms used to describe those who have been attributed as having experienced an Internet banking service. The MIC Facility has reached agreement with the pool participants regarding a re-classification of user definitions to ensure consistent measurement. This has resulted in the more valuable measure of Active users i.e. actually transacting in the previous quarter. ssentially the exciting data Pooling initiative determines for the first time the true uptake of Internet banking activity and importantly ensures that an independent facilitator acts as a conduit for the data collection, analysis and interpretation. The MIC-run facility determines not only the true size of the market but also delivers, for participants, their individual confidential relative positions. To track the market s development, MIC coordinates 90-day data pooling measures to which all participants now confidentially contribute. The subsequent quarterly reports delivered by MIC provide the various pool participants with the opportunity to position and monitor performance. Critically, the research provides the data required to underpin accurate Internet banking site development i.e. access features and the level of service customer s desire. For further information on this unique service please contact MIC Marketing. MIC (Market Intelligence trategy Centre) Telephone: (03) Level 4, 14 Collins treet Facsimile: (03) Melbourne Vic 3000 Australia mail: miscinfo@marketintelligence.com.au